The Central Bank of China will test the national digital currency for electronic payments before the end of this year. The sovereign cryptocurrency test – DCEP – will be conducted in two cities: Shenzhen and Suzhou.
China may be the first large economy to issue its own digital money. According to the plan of the People’s Bank of China, the first phase of the experiment to introduce the “digital renminbi” will be launched in Shenzhen, a metropolis with a population of over 10 million people, by the end of December, and will expand in 2020. In parallel, a pilot project starts in Suzhou, another large city with the same number of inhabitants.
DCEP will be tested by seven state-owned organizations: four banks and three telecommunications companies. Various cryptocurrency usage scenarios will be tested, including in transport, education and medicine.
It is assumed that DCEP will become a full replacement for “physical” money. In fact, cash in China is already quickly being superseded by electronic payment systems such as Alipay and WeChat Pay, as well as QR code-based applications. According to the publication, in 2013, the mobile payment method accounted for less than 20% of all payments in China, and in 2018 – over 80%.
Earlier, Mu Changchun, head of the People’s Bank of China Digital Currency Research Institute, said DCEP would be compatible with Alipay and WeChat Pay. According to him, it will be possible to pay with cryptocurrency without an Internet connection. Changchun did not specify how broadly the state will have access to transaction data, but payments are unlikely to be anonymous.